Yelp (NYSE:YELP) versus Zhihu (NYSE:ZH) Critical Comparison

Yelp (NYSE:YELP) and Zhihu (NYSE:ZH) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, analyst recommendations, valuation and risk.

Insider and Institutional Ownership

90.1% of Yelp shares are held by institutional investors. Comparatively, 28.9% of Zhihu shares are held by institutional investors. 8.0% of Yelp shares are held by company insiders. Comparatively, 13.6% of Zhihu shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Yelp and Zhihu, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yelp	2	4	0	0	1.67
Zhihu	0	0	1	0	3.00

Yelp presently has a consensus target price of $34.00, indicating a potential upside of 2.78%. Zhihu has a consensus target price of $4.70, indicating a potential upside of 12.71%. Given Zhihu’s stronger consensus rating and higher possible upside, analysts clearly believe Zhihu is more favorable than Yelp.

Volatility & Risk

Yelp has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Zhihu has a beta of 0.21, indicating that its stock price is 79% less volatile than the S&P 500.

Profitability

This table compares Yelp and Zhihu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Yelp	9.95%	19.42%	14.62%
Zhihu	-0.52%	-0.41%	-0.30%

Valuation & Earnings

This table compares Yelp and Zhihu”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Yelp	$1.41 billion	1.50	$132.85 million	$2.08	15.90
Zhihu	$493.05 million	0.74	-$23.54 million	($0.02)	-208.50

Yelp has higher revenue and earnings than Zhihu. Zhihu is trading at a lower price-to-earnings ratio than Yelp, indicating that it is currently the more affordable of the two stocks.

Summary

Yelp beats Zhihu on 10 of the 14 factors compared between the two stocks.

About Yelp

Yelp Inc. operates a platform that connects consumers with local businesses in the United States and internationally. The company's platform covers various categories, including restaurants, shopping, beauty and fitness, health, and other categories, as well as home, local, auto, professional, pets, events, real estate, and financial services. It provides free and paid advertising products to businesses, which include cost-per-click advertising and multi-location Ad products, as well as enables businesses to deliver targeted advertising to large and high-intent audience; and business listing page products. The company also offers other services comprising Yelp Guest Manager, a subscription-based suite of front-of-house management tools for restaurants, nightlife and certain other venues, which include online reservations, a waitlist management solution that allows consumers to check wait times and join waitlists remotely, as well as through hostless kiosks, and seating and server rotation management tools; Yelp Knowledge program that offers business owners local analytics and insights through access to its historical data and other proprietary content; and Yelp Fusion, which offers free access to various basic information through publicly available APIs, and paid access to content and data for consumer-facing enterprise use. In addition, it provides content licensing, as well as allows third-party data providers to update and manage business listing information on behalf of businesses. Further, the company offers its products directly through its sales force; indirectly through partners; and online through its website and business app, as well as non-advertising partner arrangements. It has partnership with Grubhub for providing consumers with a service to place food orders for pickup and delivery. The company was incorporated in 2004 and is based in San Francisco, California.

About Zhihu

Zhihu Inc. operates an online content community in the People’s Republic of China. Its community allows people to seek inspiration, find solutions, make decisions, and have fun. The company offers technology, business support, and consulting services; information transmission, software, and information technology services. It also offers information and marketing services; vocational training; and internet services, as well as holds audio-visual permit. Zhihu Inc. was founded in 2010 and is headquartered in Beijing, the People’s Republic of China.